SHANGHAI/BEIJING/SEOUL • Airline operators have cut some routes between China and South Korea as the fallout spread yesterday from a diplomatic row over Seoul's plans to deploy the US Terminal High Altitude Area Defence (Thaad) anti-missile system, regardless of Beijing's objections.

South Korea's Eastar Jet said on its website it was stopping flights between Cheongju and tourist hotspot Jeju, and various Chinese cities, including Ningbo, Jinjiang and Harbin. China Eastern Airlines and Spring Airline have also stopped selling tickets for flights between Ningbo and Jeju from next week.

This followed Costa Cruises and Royal Caribbean Cruises cancelling South Korean port visits by their China-based cruises. Princess Cruises said it would change its routes to remove visits to South Korea.

The developments have sent a chill across South Korea's tourism and retail sectors, with Chinese tourists making up nearly half of all foreign visitors.

Seoul has said the Thaad system would better protect South Korea from North Korea, which fired four ballistic missiles into the sea off Japan's north-west coast on Monday. But Beijing says the system can be used to spy on its territory.

China yesterday called for all parties involved in the dispute over Pyongyang's nuclear and missile programmes to think "out of the box" to reach a resolution.

BE CREATIVE

We hope the relevant parties can break through their thinking, think out of the box, and can take a pragmatic and reasonable attitude.

CHINESE FOREIGN MINISTRY SPOKESMAN GENG SHUANG, on how the US, South Korea and North Korea should find a solution.

Chinese Foreign Ministry spokesman Geng Shuang said at a regular briefing that a serious lack of trust between the parties meant that a lasting, thorough resolution could only be achieved by tackling the concerns of all involved. China hopes everyone can give serious consideration to its suggestions and respond constructively, Mr Geng added.

"We hope the relevant parties can break through their thinking, think out of the box, and can take a pragmatic and reasonable attitude," he said. "At the same time, China welcomes even better suggestions from the relevant parties on how to tackle the present difficulties on the peninsula, and we have an open attitude towards this."

Meanwhile, a wave of anti-South Korean sentiment has broken out in China. The Chinese news media has urged boycotts of South Korean products. Students, retirees and taxi drivers have led protests against South Korean businesses.

In Kunming, a Yunnan Minzu University student surnamed Liu said she would stop buying South Korean cosmetics. "These things are totally dispensable," she said. "Countries like South Korea and the US see our rise as a threat, so they want to work together to weaken us."

The backlash against South Korean businesses has divided the Chinese. Some say it is necessary to counter US military might in Asia. Others warn against such nationalism, arguing that China should find more amicable ways of engaging South Korea, a close economic ally.

Others have urged restraint. Ms Zhang Mengjie, 29, who adores South Korean boy bands such as BTS, said boycotts of South Korean goods and artists were irrational.

Much of the ire against South Korea has focused on Lotte, which operates 112 stores with some 13,000 employees in mainland China. As of Thursday, the Chinese authorities had closed nearly half of Lotte's stores, citing safety violations. On Wednesday, the authorities ordered the month-long closing of a chocolate factory jointly owned by Lotte and Hershey after the results of a fire inspection - the first time a US firm has been pulled into the fray.

There is little Seoul can do to retaliate, experts said. South Korea sold US$124 billion (S$176 billion) worth of goods and services to China last year, about five times the amount exported to Japan, and double that to its second-biggest market, the US.

"Seoul can continue to express its concern, and take this to the WTO (World Trade Organisation), but that's about it at the state-level," said analyst Piao Ren Jin at NH Investment and Securities. In a worst-case scenario, the spat could reduce the size of South Korea's economy by as much as 0.25 per cent, she added.

Instead, the government has advised firms to devise counter-measures such as diversifying markets.

REUTERS, NYTIMES, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on March 11, 2017, with the headline 'S. Korean tourism hit in fallout with China'. Print Edition | Subscribe

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